Trading Strategies and Techniques

Jul 5, 2024

Lecture Notes: Trading Strategies and Techniques

Key Concepts

  • Journaling Trades
    • Journaling every trade is crucial.
    • Provides insights by writing trades down on paper daily.
    • Reflect on what’s working and what’s not working.

Interview with DAV

  • Transition from Elliot Wave Analysis

    • Elliot Wave Analysis has a rules-based yet subjective approach.
    • Transitioned to more objective methods focusing on price levels.
    • Importance of market participants’ reactions to price levels.

  • Current Trading Approach

    • Using look-back periods to measure volume, price, and frequency of trades.
    • Objective analysis based on market data interaction with specified levels.
    • Trading confidence has increased.

Trading Methodology Insights

  • Difference from Pivot Points

    • Pivot points are mathematical but arbitrary (highs and lows divided by a number).
    • Current method focuses on volume at specific price levels, offering less subjectivity.

  • Practical Application

    • Timeframe agnostic: works for intraday, swing, and position trading.
    • Levels update dynamically with certain look-back periods.
    • Examples of trading interaction with levels, e.g., S&P 500.

  • Specific Instrument Strategies

    • S&P 500 for intraday trading, Forex for swing/position trading.
    • Forex pairs: Preference for major pairs with occasional focus on CAD/JPY.
    • Use of stochastic indicators for additional confirmation.

Objective vs. Subjective Trading

  • Importance of Experience

    • Experience builds discretion over time; initial trading should be more objective.
    • Discretionary trading requires deep understanding and earned trust.

  • Utilizing Trading Technology

    • Use of trade journaling software like TraderSync.
    • Analysis of trading patterns by time, symbol, and setup effectiveness.

Advanced Concepts and Strategy Refinement

  • Handling Bad Habits

    • Bad trading habits can be tough to unlearn but necessary.
    • Continuous improvement through reflection and journaling.

  • Level Adjustments

    • Adjustments based on look-back periods, important for maintaining relevance.

  • Adaptability and Learning

    • Adapting strategies based on experience and market evolution.
    • Avoiding over-diverse trading to maintain focus and effectiveness.

General Advice for Aspiring Full-Time Traders

  • Specialization and Focus

    • Specialize in a few instruments to develop expertise.
    • Choose instruments fitting your demeanor and risk tolerance.

  • Commitment to Process

    • Consistent journaling and review to refine strategies.
    • Handling trading day's scenarios with preparation to avoid reactive trading.

  • Learning and Community

    • Engage with experienced traders; find reliable sources of information.
    • Participate in focused trading forums or groups.

Trading Tools and Resources

  • Aspen Trading’s Tools
    • Website: Aspen Trading.
    • Available for TradingView, MotiveWave, and soon Bloomberg.
    • Subscription-based access with supporting Discord community.